<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Dorsey Trailers, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
DORSEY TRAILERS, INC.
ONE PACES WEST, SUITE 1700
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
March 23, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Dorsey Trailers, Inc. which will be held at One Paces West, 2727 Paces Ferry
Road, Atlanta, Georgia, on Monday, April 27, 1998, at 10:30 A.M. local time.
We look forward to your attendance at the Annual Meeting so that you can
vote your shares in person and become better acquainted with the members of your
Board of Directors and your management team. The items of business to be
conducted at the Annual Meeting are explained in the accompanying Proxy
Statement. Even if you are planning to attend, please complete the enclosed
proxy card and return it in the enclosed envelope so that your shares may be
voted. You will still be able to vote your shares in person if you attend the
Annual Meeting.
Your past support is sincerely appreciated, and, with your continued
support, we look forward to the next year.
If you have any questions about the Proxy Statement or the 1997 Annual
Report, please contact James E. Clements at (770) 438-9595.
We look forward to seeing you on April 27, 1998.
Sincerely,
/s/ MARILYN R. MARKS
MARILYN R. MARKS
Chairman of the Board,
and Chief Executive Officer
<PAGE> 3
DORSEY TRAILERS, INC.
ONE PACES WEST, SUITE 1700
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
---------------------
NOTICE TO THE HOLDERS OF COMMON STOCK
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1998
---------------------
Notice is hereby given to the holders of Common Stock of Dorsey Trailers,
Inc. (the "Company") that the Annual Meeting of Stockholders (the "Annual
Meeting") of the Company will be held at One Paces West, 2727 Paces Ferry Road,
Atlanta, Georgia, on Monday, April 27, 1998, at 10:30 A.M., local time, for the
following purposes:
(i) to elect one person to serve as a director of the Company;
(ii) to ratify an Amendment to the Company's 1994 Stock Plan for
Non-Employee Directors (the "Directors' Plan") to increase the number of
shares of Common Stock authorized for issuance under the Directors' Plan
from 30,000 to 295,000, to increase the amount of the annual award from
$7,500 to $10,000, and to extend the term of the Directors' Plan from
August 4, 1999 to August 4, 2019 (20 years).
(iii) to ratify an Amendment to the Company's 1994 Long-Term Incentive
Plan (the "Incentive Plan") to increase the number of shares of Common
Stock authorized for issuance under the Incentive Plan from 250,000 to
500,000.
(iv) to ratify the selection of Price Waterhouse LLP as independent
certified public accountants for the year ending December 31, 1998; and
(v) to consider and act upon such other business as may properly come
before the meeting or any adjournments thereof.
Only those stockholders of record at the close of business on March 10,
1998, are entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof. The transfer books will not be closed. A complete list of
stockholders entitled to vote at the Annual Meeting will be available at the
Annual Meeting.
By Order of the Board of Directors,
/s/ JAMES E. CLEMENTS
JAMES E. CLEMENTS
Secretary
March 23, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS REPLY
ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY APPOINTMENT AND VOTE IN PERSON.
<PAGE> 4
DORSEY TRAILERS, INC.
ONE PACES WEST, SUITE 1700
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
---------------------
PROXY STATEMENT
---------------------
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1998
March 23, 1998
INTRODUCTION
This Proxy Statement is furnished to holders of the common stock, $.01 par
value per share ("Common Stock"), of Dorsey Trailers, Inc., a Delaware
corporation (the "Company"), in connection with the solicitation of proxies by
the Company's Board of Directors from holders of the outstanding shares of
Common Stock for use at the Annual Meeting of Stockholders to be held at 10:30
A.M. local time at One Paces West, 2727 Paces Ferry Road, Atlanta, Georgia, on
Monday, April 27, 1998, and at any adjournments thereof (the "Annual Meeting").
The Annual Meeting will be held for the following purposes:
(i) to elect one person to serve as a director of the Company;
(ii) to ratify an Amendment to the Company's 1994 Stock Plan for
Non-Employee Directors (the "Directors' Plan") to increase the
number of shares of Common Stock authorized for issuance under the
Directors' Plan from 30,000 to 295,000, to increase the amount of
the annual award to each eligible director from $7,500 to $10,000,
and to extend the term of the Directors' Plan from August 4, 1999
to August 4, 2019 (20 years).
(iii) to ratify an Amendment to the Company's 1994 Long-Term Incentive
Plan (the "Incentive Plan") to increase the number of shares of
Common Stock authorized for issuance under the Incentive Plan from
250,000 to 500,000.
(iv) to ratify the selection of Price Waterhouse LLP as independent
certified public accountants for the year ending December 31, 1998;
and
(v) to consider and act upon such other business as may properly come
before the meeting or any adjournments thereof.
The Company's mailing address and the location of its principal executive
offices are One Paces West, Suite 1700, 2727 Paces Ferry Road, Atlanta, Georgia
30339. This Proxy Statement and the accompanying Proxy are first being mailed to
stockholders of the Company on or about March 27, 1998.
STOCKHOLDERS ENTITLED TO VOTE
Only stockholders of record of the Company at the close of business on
March 10, 1998 (the "Record Date") will be entitled to notice of, and to vote
at, the Annual Meeting. On the Record Date, there were 5,013,422 shares of
Common Stock issued and outstanding held by approximately 95 stockholders of
record. Notwithstanding the Record Date specified above, the Company's stock
transfer books will not be closed and shares may be transferred subsequent to
the Record Date. However, all votes must be cast in the names of stockholders of
record on the Record Date.
Pursuant to the Company's Certificate of Incorporation (the "Certificate of
Incorporation"), holders of Common Stock will be entitled to one vote for each
share held. The election of a director requires the
<PAGE> 5
affirmative vote of a plurality of the shares of Common Stock cast at the Annual
Meeting, provided a quorum is present, and, therefore, abstentions and broker
non-votes will have no effect. The ratification of the Amendment to the
Company's Directors' Plan requires the affirmative vote of a plurality of the
shares of Common Stock cast at the Annual Meeting provided a quorum is present,
and, therefore, abstentions or broker non-votes will have no effect. The
ratification of the Amendment to the Company's Incentive Plan requires the
affirmative vote of a plurality of the shares of Common Stock cast at the Annual
Meeting provided a quorum is present, and, therefore, abstentions or broker
non-votes will have no effect. The ratification of the selection of Price
Waterhouse LLP as independent certified public accountants requires the
affirmative vote of a majority of the shares of Common Stock cast at the Annual
Meeting, provided a quorum is present, and, therefore, abstentions or broker
non-votes will have no effect. Pursuant to the Company's Bylaws (the "Bylaws"),
a majority of the shares of Common Stock must be present to establish a quorum.
For the purpose of determining the presence of a quorum, abstentions will be
counted as present, but broker non-votes will not be counted.
PROXIES
If the enclosed Proxy is executed, returned in time and not revoked, the
shares represented thereby will be voted in accordance with the instructions
indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED
(I) FOR THE ELECTION OF THE NOMINEE FOR DIRECTOR OF THE COMPANY, (II) FOR
RATIFICATION OF THE AMENDMENT TO THE COMPANY'S DIRECTORS' PLAN TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER, TO INCREASE
THE AMOUNT OF THE ANNUAL AWARD, AND TO EXTEND THE TERM, (III) FOR RATIFICATION
OF THE AMENDMENT TO THE COMPANY'S INCENTIVE PLAN TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER, (IV) FOR RATIFICATION
OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1998, AND (V) IN THE BEST
JUDGMENT OF SUCH PROXIES AS TO ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE
THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
A stockholder who has given a Proxy may revoke it at any time prior to its
exercise at the Annual Meeting by either (i) giving written notice of revocation
to the Secretary of the Company, (ii) properly submitting to the Company a duly
executed Proxy bearing a later date, or (iii) appearing at the Annual Meeting
and voting in person. All written notices of revocation of Proxies should be
addressed as follows: Dorsey Trailers, Inc., One Paces West, Suite 1700, 2727
Paces Ferry Road, Atlanta, Georgia 30339, Attention: James E. Clements,
Secretary.
PROPOSAL I
ELECTION OF DIRECTOR
The Company's Bylaws provide that the number of directors shall be
authorized by resolution of a majority of the Board of Directors. The Board of
Directors has by resolution set the number of directors at five. The Company's
Certificate of Incorporation provides for the Board of Directors to consist of
three classes of directors serving staggered terms of office with each class to
consist, as nearly as possible, of one-third of the total number of directors
constituting the entire Board of Directors. Upon the expiration of the term of
office for a class of directors, the nominees for that class will be elected for
a three-year term to serve until the election and qualification of their
successors. The Class I director, J. Hoyle Rymer has been nominated for re-
election at the Annual Meeting. The Class III and Class II directors have two
years and one year, respectively, remaining on their terms of office and will
not be voted upon at the Annual Meeting.
It is the intention of the persons named as proxies to vote the proxies for
the nominee's election as Class I director of the Company, unless the
stockholders direct otherwise in their proxies. The nominee has consented to
serve as a director of the Company. In the unanticipated event that the nominee
refuses or is unable to serve
2
<PAGE> 6
as a director, the persons named as proxies reserve full discretion to vote for
such other person as may be nominated. The Board of Directors has no reason to
believe that J. Hoyle Rymer will be unable or will decline to serve as a
director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MR. RYMER. THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A PLURALITY OF THE SHARES CAST IN THE
ELECTION AT THE ANNUAL MEETING AT WHICH A QUORUM IS PRESENT IS REQUIRED FOR THE
ELECTION OF MR. RYMER.
DIRECTOR AND DIRECTOR NOMINEE INFORMATION
Based on information supplied by them, set forth below is certain
information concerning the nominee for election as Class I director and the
directors in Classes II and III whose terms of office will continue after the
Annual Meeting, including the name and age of each, their current principal
occupations (which has continued for five years unless otherwise indicated), the
names and principal businesses of the organizations in which their occupations
are carried on, the year each was elected to the Board of Directors of the
Company, their positions with the Company, and their directorships in other
companies.
NOMINEE FOR DIRECTOR
Class I Nominee for Director
J. Hoyle Rymer (age 53) was an advisor to the Company from 1992 to 1994 and
has been a director of the Company since May 1994. He has been the President of
JHR Co. (a private investment company) since July 1989 and ExecUSource, Inc. (a
consulting and temporary management service firm) since 1986. He was President
of Magic Chef Co., a division of Maytag, Inc., from 1978 to 1988. Mr. Rymer is a
director of First American National Bank of Cleveland, Tennessee and Plasti-Line
Inc.
CONTINUING DIRECTORS
Class II Director Continuing in Office (Term expires 1999)
Lawrence E. Mock, Jr. (age 51) was an advisor to the Company from 1992 to
1994 and has been a director of the Company since May 1994. Mr. Mock is
currently President and Chief Executive Officer of Mellon Ventures, Inc., a
subsidiary of Mellon Bank Corporation. Prior to this, Mr. Mock was President of
Strategic Equity Advisors, Inc. (a personal holding company) from 1994 to
mid-1995. From 1983 through 1993, he was President, Chief Executive Officer and
General Partner of River Capital, Inc. and River Capital Partners, L.P.,
Atlanta-based equity investment firms. Prior to 1983, Mr. Mock was Chief
Operating Officer of Hangar One, Inc. (an aviation sales and service company).
Class III Directors Continuing in Office (Term expires 2000)
Marilyn R. Marks (age 45) has been the Chief Executive Officer and a
director of the Company since 1987 when she led a leveraged buyout of the
Company's predecessor. Before the leveraged buyout, Miss Marks held several
executive positions with the former parent company, The Dorsey Corporation,
whose shares were listed on the New York Stock Exchange. Miss Marks serves on
the Board of Directors of Eastman Chemical Company and Dana Corporation.
Neil A. Springer (age 59) was an advisor to the Company from 1990 until
1994 and has been a director of the Company since May 1994. Mr. Springer has
been Managing Director of Springer Souder & Associates (an executive placement
company) since June 1994. Mr. Springer was Senior Vice President of Slayton
International, Inc. (an executive placement company) from August 1992 until June
1994. He was President -- Central Region of Alexander Proudfoot Company (a
management consulting firm) from July 1991 to July 1992. Previously, he was the
President and Chief Operating Officer of Navistar International Corp. from April
1990 through October 1990. From 1989 to March 1990, he was the Chairman,
President and Chief Executive Officer of Navistar International Transportation
Corp., a wholly-owned subsidiary of Navistar International Corp. Mr. Springer is
a director of US Freightways Corporation and IDEX.
3
<PAGE> 7
RETIRING DIRECTOR
In conjunction with his retirement plans, Ernest H. Lorch intends to retire
from his position as a director of the Company after the Annual Meeting and will
not continue as a director. Mr. Lorch has been a director of the Company since
April 1996; his current term as a director was to expire in 1999. The Company
has decided not to fill Mr. Lorch's position as a director of the Company at
this time.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has established standing Audit and Compensation
Committees. The Company does not have a standing nominating committee.
Audit Committee. The Audit Committee, which is comprised of Messrs. Rymer,
Springer, and Lorch, is responsible for reviewing and making recommendations
regarding the Company's employment of independent certified public accountants,
the annual audit of the Company's financial statements and the Company's
internal controls, accounting practices and policies. During 1997, the Audit
Committee met one time.
Compensation Committee. The Compensation Committee, which is comprised of
Messrs. Mock and Rymer, is responsible for determining the compensation of the
Company's executive officers, establishing targets and incentive awards under
incentive compensation plans and administering employee benefits. During 1997,
the Compensation Committee did not meet.
During 1997, the Board of Directors met 14 times. Each director, during the
period he or she was a director, attended at least 75% of the meetings of the
Board of Directors and at least 75% of the total number of meetings of all of
the committees on which he or she served.
DIRECTOR COMPENSATION
The Company pays non-employee directors an annual retainer of $7,500
payable in cash and $7,500 payable in shares of Common Stock pursuant to the
Dorsey Trailers, Inc. 1994 Stock Plan for Non-Employee Directors. See "Proposal
II Amendment to the Company's 1994 Stock Plan for Non-Employee Directors to
increase the number of shares of Common Stock reserved for issuance thereunder,
to increase the amount of the annual award, and to extend the term." The
chairman of each Board committee also receives an additional $1,000 per year. In
addition, directors receive $1,000 for each Board meeting and $500 for each
committee meeting attended, plus reimbursement of expenses incurred in attending
meetings. No additional fee is paid for committee meetings held in conjunction
with Board meetings.
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company are Miss Marks (who is
identified previously), Lorri M. Palko, James E. Clements and David A. Kemp.
Lorri M. Palko (age 37) joined the Company in November 1997 as President
and Chief Operating Officer. From 1994 until joining the Company, Ms. Palko was
President and Chief Executive Officer of Morgan Corporation (a truck body
manufacturer) and was with Morgan Corporation in various other positions since
1984.
James E. Clements (age 38) joined the Company in July 1997 as Vice
President Finance, Secretary and Chief Financial Officer. Prior to joining the
Company, Mr. Clements was Treasurer and Controller for Seabrook Enterprises,
Inc. (a food ingredient manufacturer). Prior to that he was an audit manager
with Price Waterhouse LLP.
David A. Kemp (age 39) joined the Company in January 1991 as Director of
Engineering and was promoted to Vice President -- Engineering in January 1993.
From 1983 until joining the Company, he was a project engineer at Great Dane
Trailers.
4
<PAGE> 8
EXECUTIVE COMPENSATION
The following table presents certain information concerning compensation
earned for services rendered in all capacities to the Company by the Company's
Chief Executive Officer and each of the other three most highly compensated
executive officers of the Company (collectively, the "Named Executive Officers")
for the years ended December 31, 1997, 1996, and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION -------------
------------------ SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- --------------------------- ------ -------- ------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Marilyn R. Marks..................... 1997 $232,000 $ -- -- $ --
Chief Executive Officer 1996 232,000 -- -- --
1995 225,000 -- -- 4,620
Lorri M. Palko....................... 1997 $265,000 $ -- 75,000 shares $ --
President
James E. Clements.................... 1997 $125,000 $ -- 50,000 shares $ --
Vice President -- Finance
David A. Kemp........................ 1997 $124,000 $ -- -- $ --
Vice President -- Engineering 1996 124,000 -- -- --
1995 116,000 10,000 -- --
H. Douglas Allgood(2)................ 1997 $111,000 $ -- -- $ --
Vice President -- 1996 111,000 -- -- --
Manufacturing Services 1995 108,000 -- -- 3,915
T. Charles Chitwood(3)............... 1997 $188,000 $ -- 15,000 shares(4) $ --
Vice President -- Finance 1996 188,000 -- -- --
1995 182,500 -- -- 4,620
</TABLE>
- ---------------
(1) Represents matching contributions pursuant to the Company's 401(k) plan.
(2) Mr. Allgood resigned from his position with the Company in December 1997.
(3) Mr. Chitwood retired from his position with the Company in September 1997.
(4) The options were canceled in December 1997.
STOCK OPTIONS
Option Grants in the Year-Ended December 31, 1997. The following table
sets forth certain information concerning the grant of options to purchase
Common Stock pursuant to the Company's Incentive Plan to Named Executive
Officers during the year-end December 31, 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES FOR OPTION TERM(2)
OPTIONS IN FISCAL EXERCISE EXPIRATION ------------------
NAME GRANTED(1) YEAR 1997 PRICE ($/SH) DATE 5% ($) 10% ($)
- ---- ---------- ----------- ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Lorri M. Palko......................... 75,000 35.0% $2.50 10/23/07 525,918 706,827
James E. Clements...................... 50,000 23.0 3.72 7/14/07 388,974 568,436
</TABLE>
- ---------------
(1) Options were issued under the Company's Incentive Plan. These options vest
in one-third annual increments beginning one year after the date of grant.
5
<PAGE> 9
(2) Based upon the market price on the date of grant and on annual appreciation
at the rate stated of such market price through the expiration date of such
options. The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
Option Exercises and Year-End Values. The following tables set forth all
options exercised by the Named Executive Officers during the year ended December
31, 1997, and the number and value of options held by such Named Executive
Officers at fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES UNDERLYING VALUE OF UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE AT DECEMBER 31, AT DECEMBER 31, AT DECEMBER 31,
ON EXERCISE REALIZED 1997 1997(1) 1997(1)
--------------- -------- ------------------- -------------------- --------------------
(EXERCISABLE) (UNEXERCISABLE)
<S> <C> <C> <C> <C> <C>
Marilyn R. Marks......... -- $ -- -- $ -- $ --
Lorri M. Palko........... -- -- 75,000 -- 4,500
James E. Clements........ -- -- 50,000 -- --
David A. Kemp............ 35,000 131,912 79,067 180,786 --
H. Douglas Allgood(2).... 25,000 55,053 83,051 186,034 --
T. Charles Chitwood(3)... 145,299 376,930 -- -- --
</TABLE>
- ---------------
(1) Based on the closing price on the Nasdaq Stock Market of the Company's
Common Stock on December 31, 1997 ($2.56).
(2) Mr. Allgood resigned from his position with the Company in December 1997.
(3) Mr. Chitwood retired from his position with the Company in September 1997.
INCENTIVE PLANS
Pension Plans. The Company sponsors a defined benefit pension plan for
employees, which has been maintained in compliance with the tax qualification
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). The
plan provides monthly payments in the form of a life annuity to salaried
employees of the Company who retire at normal or early retirement age (65 and 60
respectively). The monthly payments are not subject to offset for Social
Security or other payments. Cash contributions are made by the Company on an
annual basis to an irrevocable pension trust in order to fund the future pension
payments. The Company also adopted an excess benefit plan in 1994 for executives
earning over $150,000. The excess plan provides the pension benefits which
cannot be provided under the defined benefit plan because of the $150,000
compensation limit under the Code. The excess plan benefits are not funded. Any
benefits due under the excess plan will be paid from the Company's general
assets.
6
<PAGE> 10
The following table shows the total estimated annual pension benefits
payable to a covered participant at normal retirement age under the defined
benefit and excess plans:
YEARS OF SERVICE AT NORMAL RETIREMENT AGE
<TABLE>
<CAPTION>
REMUNERATION(1) 10 15 20(2)
- --------------- ------- -------- --------
<S> <C> <C> <C>
$100,000 $19,610 $ 29,415 $ 39,220
125,000 24,610 36,915 49,220
150,000 29,610 44,415 59,220
175,000 34,610 51,915 69,220
200,000 39,610 59,415 79,220
225,000 44,610 66,915 89,220
250,000 49,610 74,415 99,220
300,000 59,610 89,415 119,220
350,000 69,610 104,415 139,220
</TABLE>
- ---------------
(1) The remuneration taken into account under these plans is the average annual
compensation reported to the covered employee on IRS Form W-2 for the five
calendar years preceding retirement.
(2) A maximum of 20 years of service is taken into account in determining
pension benefits.
Benefits under the plans generally vest after the participant has completed
five years of employment with the Company. The retirement benefit payable at age
65 to participants is 1.35% of the first $6,000 of the participants'
remuneration and 2% of the participants' remuneration in excess of $6,000 both
multiplied by the participants' years of service (to a maximum of 20 years).
Benefits under the plans are reduced (i) if at retirement the participant has
fewer than 20 years of employment with the Company and (ii) if the participant
begins to receive benefits prior to age 62.
As of December 31, 1997, Miss Marks had an average five-year compensation
of $257,050 and ten years of credited service; Ms. Palko had an average
five-year compensation of $93,000 and two months of credited service; Mr.
Clements had an average five-year compensation of $58,815 and six months of
credited service; Mr. Kemp had an average five-year compensation of $131,600 and
six years of credited service; Mr. Allgood who resigned from his position with
the Company in December 1997, had an average five-year compensation of $120,120
and five years of credited service; and Mr. Chitwood who retired from his
position with the Company in September 1997, had an average five-year
compensation of $194,345 and eight years of credited service.
PROPOSAL II
AMENDMENT TO THE COMPANY'S 1994 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR
ISSUANCE THEREUNDER, TO INCREASE THE AMOUNT OF THE,
ANNUAL AWARD AND TO EXTEND THE TERM
On July 6, 1994, the Board of Directors of the Company adopted and the
stockholders of the Company approved the Company's Directors' Plan. The purpose
of the Directors' Plan is to retain and provide motivation to non-employee
members of the Board of Directors of the Company to put forth maximum efforts to
the success of the Company by providing incentives to such directors through the
ownership and performance of the Common Stock of the Company. The Directors'
Plan provides for the issuance of shares of Common Stock to directors of the
Company who are not current or former employees of the Company or members of the
immediate family of a current or former employee of the Company. Currently
Messrs. Mock, Rymer, Springer and Lorch participate in the Directors' Plan.
Subject to adjustments as provided in the Directors' Plan, the aggregate
number of shares of Common Stock reserved for issuance under the Directors' Plan
is currently stated at 30,000 shares of Common Stock. As of March 23, 1998,
total shares of Common Stock issued under the Directors' Plan is 28,411.
7
<PAGE> 11
Currently each eligible director is to be awarded shares of Common Stock
having an aggregate fair market value equal to $7,500 as of the day of each
Annual Meeting on which such eligible director serves as a member or is elected
to be a member of the Board of Directors of the Company.
The Board of Directors has approved an amendment to the Directors' Plan
whereby the number of shares of Common Stock authorized for issuance under the
Directors' Plan is increased from 30,000 to 295,000, to increase the annual
award from $7,500 to $10,000 and to extend the term of the Directors' Plan from
August 4, 1999 to August 4, 2019 (20 years). The Board of Directors believes
that equity interest are a significant factor in the Company's ability to
attract and retain directors who are critical to the Company's long range
success and that the amendment to the Directors' Plan is necessary in order to
continue to provide directors of the Company with incentives to serve the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE AMENDMENT TO THE COMPANY'S 1994 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE UNDER THE
DIRECTORS' PLAN FROM 30,000 TO 295,000, TO INCREASE THE AMOUNT OF THE ANNUAL
AWARD FROM $7,500 TO $10,000, AND TO EXTEND THE TERM OF THE DIRECTORS' PLAN FROM
AUGUST 4, 1999 TO AUGUST 4, 2019 (20 YEARS).
PROPOSAL III
AMENDMENT TO THE COMPANY'S 1994 LONG-TERM INCENTIVE PLAN TO
INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER
On July 6, 1994, the Board of Directors of the Company and the stockholders
of the Company approved the Company's Incentive Plan. The purpose of the
Incentive Plan is to promote the success, and enhance the value, of the Company
by linking the personal interests of executive officers and other key employees
to those of the Company's stockholders, and by providing executive officers and
other key employees with an incentive for outstanding performance. The Incentive
Plan is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of employees upon whose judgment,
interest, and special effort the successful conduct of its operation largely is
dependent.
Subject to adjustments as provided in the Incentive Plan, the aggregate
number of shares of Common Stock reserved for issuance under the Incentive Plan
is currently stated at 250,000 shares of Common Stock. During the year-ended
December 31, 1997, two grants were made to Named Executive Officers for an
aggregate of 125,000 shares of Common Stock with an exercise price based on the
closing market price on the grant date. These exercise prices range from $2.50
to $3.72. As of March 23, 1998, total shares of Common Stock issued under the
Incentive Plan is 207,833.
The Board of Directors has approved an amendment to the Incentive Plan
whereby the number of shares of Common Stock authorized for issuance under the
Incentive Plan is increased from 250,000 to 500,000. The Board of Directors
believes that equity interest are a significant factor in the Company's ability
to attract and retain the executive officers and other key employees who are
critical to the Company's long range success. The Board of Directors believes
that the amendment to the Incentive Plan is necessary in order to continue to
recruit those executive officers and key employees critical to the Company's
long-term success and to provide these executive officers and key employees of
the Company with incentives to continue to serve the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE AMENDMENT TO THE COMPANY'S 1994 LONG-TERM INCENTIVE PLAN TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE UNDER THE INCENTIVE
PLAN FROM 250,000 TO 500,000.
8
<PAGE> 12
STOCKHOLDER RETURN COMPARISON
The following line graph presentation compares cumulative stockholder
returns of the Company with the Nasdaq Stock Market (U.S. Companies) and a Peer
Index for the period beginning July 28, 1994 (assuming the investment of $100 in
the Company's Common Stock, the Nasdaq Stock Market (U.S. Companies) and the
Peer Index and reinvestment of all dividends). The Peer Index is composed of
stocks in the Nasdaq Trucking and Transportation Stock Index.
CUMULATIVE RETURNS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DORSEY TRAILERS, THE NASDAQ STOCK
(FISCAL YEAR COVERED) INC. MARKET PEER INDEX
<S> <C> <C> <C>
7/28/94 100 100 100
12/31/94 116.3 106.4 94.4
12/31/95 40.4 150.3 109.3
12/31/96 25 185.1 121.3
3/31/97 18.3 175.1 120.1
6/30/97 24 207.2 137.5
9/30/97 22.1 242.3 161.8
12/31/97 19.7 227.2 156.3
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The elements of executive compensation consist of base salary, annual cash
incentive bonus compensation, long-term incentive compensation in the form of
stock options, and various other benefits which are generally available to all
employees of the Company.
Base Salary. The base salary for an executive officer is based on the
officer's responsibilities and is set at a level that the Compensation Committee
believes is competitive with other companies in the trucking and transportation
industry. For 1997, the Board of Directors relied primarily upon the advice of
Miss Marks in determining salaries for executive officers. For 1997, Miss Marks
salary was $232,000. The 1997 compensation of Marilyn R. Marks, the Company's
Chief Executive Officer, was based on a review of salaries paid by other
manufacturing enterprises of similar size within the geographic area, and the
leadership provided by Miss Marks in her role as Chief Executive Officer. Miss
Marks' salary remained the same for 1996 and 1997.
Bonus Plan. Executive officers are also eligible for participation in the
Company's annual bonus plan. This plan awards executive officers with cash
bonuses based upon the achievement of certain levels of pretax earnings by the
Company. The Committee believes that the bonus plan provides appropriate
incentives to the executive officers to increase the value of the Company in a
manner that also increases the value of the Company for its stockholders.
Under the bonus plan adopted by the Board of Directors for 1997, executive
officers were eligible to receive a bonus ranging from 15% to 75% of their base
salaries depending on the level of pretax earning
9
<PAGE> 13
achieved by the Company. No bonuses were awarded to executive officers for the
year ended December 31, 1997.
Long-Term Incentives. Long-term incentive for executive officers is
provided by the grant of stock options. The Committee believes that the grant of
stock options provides the executive officers with the long-term incentive to
enhance the value of the Company by directly tying the compensation of the
executive officers to increases in stockholder value. During 1997, the Committee
granted two stock options for an aggregate of 125,000 shares of Common Stock to
Named Executive Officers as of December 31, 1997. See Proposal III "Amendment to
the Company's 1994 Long-Term Incentive Plan to increase the number of shares of
Common Stock reserved for issuance thereunder."
Other Compensation Plans. The Company maintains several broadly-based
employee benefit plans in which the executive officers are permitted to
participate on the same terms as other employees. These include a retirement
savings plan designed to qualify under section 401(k) of the Code and a defined
benefit pension plan that provides monthly payment in the form of a life annuity
following five years of employment with the Company. Certain executive officers
are also eligible for participation in an excess benefit plan for highly
compensated individuals which increases payouts under the defined benefit
pension plan.
Tax Deductibility of Compensation. Section 162(m) of the Code generally
disallows a tax deduction to public companies for compensation over $1 million
to each of the Named Executive Officers. Certain performance-based compensation
is, however, exempted from the deduction limit. For 1997, the Committee did not
take section 162(m) into account as no executive was near the $1 million
threshold. In the future, the Committee will consider the effect of section
162(m) on its compensation decisions, but has no policy to limit executive
compensation so that all compensation is deductible.
COMPENSATION COMMITTEE
Lawrence E. Mock, Jr.
J. Hoyle Rymer
March 13, 1998
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<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Rymer and Mock served as members of the Compensation Committee
throughout 1997.
CERTAIN TRANSACTIONS
The following is a summary of certain transactions entered into between the
Company and certain of its executive officers and directors.
Marilyn Marks guarantees 33% of the amount of the Company's loan from the
U.S. Small Business Administration (the "SBA Loan"). As of December 31, 1997,
the principal balance of the SBA Loan was $6,984,000.
Subsequent to year-end 1996 through March 28, 1997, the Company sold used
trailers at various dates, upon the approval of the Board of Directors of the
Company, in the amount of approximately $4,657,000 to TYM, Inc. TYM, Inc. is a
corporation which is wholly-owned by Marilyn R. Marks, Chief Executive Officer
of the Company. The Company incurred losses of approximately $819,000 on the
sales to TYM, Inc. In the opinion of management, based upon actual third-party
offers, the terms of the sale of these used trailers were no less favorable than
terms that could have been obtained from unaffiliated parties. There were no
such transactions subsequent to March 28, 1997.
During 1997, the Company paid ExecUSource, Inc., a consulting and temporary
management service firm, $68,000 for professional services. ExecUSource, Inc. is
a S-Corporation whereby Mr. Rymer, a director of the Company, is a fifty-percent
owner. During 1997, the Company paid Springer Souder & Associates, an executive
placement firm, $54,000 for assistance in recruiting of executive officers.
Springer Souder & Associates is a partnership whereby Mr. Springer, a director
of the Company, is a partner.
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth information with respect to the beneficial
ownership of shares of Common Stock as of February 16, 1998 by (i) each director
and nominee for director of the Company; (ii) the Named Executive Officers of
the Company; (iii) each person known by the Company to own beneficially more
than 5% of the outstanding shares of the Common Stock; and (iv) all directors
and executive officers of the Company as a group. Unless otherwise indicated,
each stockholder has sole voting and investment power with respect to the
indicated shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME BENEFICIALLY OWNED(1) OF CLASS
- ---- --------------------- --------
<S> <C> <C>
Marilyn R. Marks(2)......................................... 1,614,964(4) 32.2 %
Lorri M. Palko.............................................. -- *
James E. Clements........................................... -- *
David A. Kemp............................................... 80,067(5) 1.6 %
Lawrence E. Mock, Jr. ...................................... 7,623(6) *
J. Hoyle Rymer(2)........................................... 381,602(7) 7.6 %
Neil A Springer............................................. 7,423 *
Ernest H Lorch.............................................. 6,142 *
T. Charles Chitwood(3)...................................... 351,152 7.0 %
All directors and executive officers as a group (8
persons).................................................. 2,018,754(8) 40.27%
</TABLE>
- ---------------
* Represents less than 1% of the Common Stock outstanding.
(1) Information relating to the beneficial ownership of Common Stock by the
above individuals is based upon information furnished by each such
individual using "beneficial ownership" concepts set forth in rules
promulgated by the Securities and Exchange Commission under Section 13(d) of
the Securities Exchange Act of 1934, as amended.
11
<PAGE> 15
(2) The named person's address is One Paces West, Suite 1700, 2727 Paces Ferry
Road, Atlanta, Georgia 30339.
(3) The named person's address is 1412 Waterford Greenway, Marietta, Georgia
30068. Mr. Chitwood retired from his position with the Company in September
1997.
(4) Of these shares, 324,216 shares are subject to stock options issued by Miss
Marks, all of which are currently exercisable.
(5) Consists of options to purchase 79,067 shares of Common Stock granted by
Miss Marks.
(6) Includes 200 shares held by Mr. Mock as custodian for his children.
(7) Includes 75,000 shares of Common Stock held by Mr. Rymer as trustee for his
child as to which he has sole investing power.
(8) Includes 79,067 shares of Common Stock that are currently held by Miss
Marks, but are subject to options held by all executive officers and
directors as a group.
PROPOSAL IV
APPROVAL OF SELECTION OF AUDITORS
The Company's Board of Directors, at the recommendation of the Audit
Committee, has selected Price Waterhouse LLP to conduct the annual audit of the
financial statements of the Company for the year ending December 31, 1998. Price
Waterhouse LLP has no financial interest, direct or indirect, in the Company,
and does not have any connection with the Company except in its professional
capacity as an independent certified public accountants.
The ratification by the stockholders of the selection of Price Waterhouse
LLP as independent certified public accountants is not required by law or by the
Bylaws of the Company. The Board of Directors, consistent with the practice of
most publicly held corporations, is nevertheless, submitting this selection to
the stockholders. If this selection is not ratified at the Annual Meeting, the
Board of Directors intends to reconsider its selection of independent certified
public accountants for the year ending December 31, 1998.
The Audit Committee, approves in advance all material non-audit services to
be provided by Price Waterhouse LLP and believes that these services have no
effect on audit independence.
Representatives of Price Waterhouse LLP will be present at the Annual
Meeting and will have an opportunity to make a statement, if they so desire, and
to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1998. RATIFICATION OF PRICE
WATERHOUSE LLP REQUIRES THAT THE VOTES CAST FOR RATIFICATION EXCEED THE VOTES
CAST AGAINST RATIFICATION, PROVIDED A QUORUM IS PRESENT.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder would like to be presented at the next
Annual Meeting of Stockholders to be held in 1999 must be received by the
Company on or before December 26, 1998. Only proper proposals which are timely
received will be included in the Proxy Statement and Proxy.
OTHER MATTERS
FILINGS UNDER SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Officers, directors and greater than ten percent beneficial owners are required
by applicable regulations to furnish the Company with copies of all Section
16(a) forms they file.
12
<PAGE> 16
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that during 1997 all of its officers and
directors complied with all applicable filing requirements, except as follows:
Form 3 Initial Statement of Beneficial Ownership of Securities
James E. Clements
The Form 3 has been filed with the Securities and Exchange Commission for
James E. Clements.
EXPENSES OF SOLICITATION
The Company will bear the cost of soliciting proxies. In addition to the
use of the mails, proxies may be solicited by directors, officers or other
employees of the Company, personally, by telephone or by telegraph. The Company
does not expect to pay any compensation for the solicitation of proxies, but may
reimburse brokers, custodians or other persons holding stock in their names or
in the names of nominees for their expenses in sending proxy materials to
principals and obtaining their instructions.
AVAILABILITY OF ANNUAL REPORT
ACCOMPANYING THIS PROXY STATEMENT IS A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997. STOCKHOLDERS WHO WOULD LIKE
ADDITIONAL COPIES OF THE ANNUAL REPORT SHOULD DIRECT THEIR REQUESTS IN WRITING
TO: DORSEY TRAILERS, INC., ONE PACES WEST, SUITE 1700, 2727 PACES FERRY ROAD,
ATLANTA, GEORGIA 30339, ATTENTION: JAMES E. CLEMENTS, SECRETARY.
13
<PAGE> 17
APPENDIX
PROXY DORSEY TRAILERS, INC.
ATLANTA, GEORGIA
ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Dorsey Trailers, Inc. (the "Company"),
Atlanta, Georgia, hereby constitutes and appoints Marilyn R. Marks and James E.
Clements or either one of them, each with full power of substitution, to vote
the number of shares of Common Stock which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders to be held at
One Paces West, 2727 Paces Ferry Road, Atlanta, Georgia, on Monday, April 27,
1998, at 10:30 A.M., local time, or at any adjournments thereof (the "Annual
Meeting"), upon the proposals described in the Notice of Annual Meeting of
Stockholders and Proxy Statement, both dated March 23, 1998, the receipt of
which is acknowledged, in the manner specified below.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1,2,3, AND 4. THIS PROXY WILL ALSO BE VOTED WITH DISCRETIONARY
AUTHORITY ON ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears on your stock certificate and
date. Where shares are held jointly, each stockholder should sign. When signing
as executor, administrator, trustee, or guardian, please give full title as
such. If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________________ _______________________________________
__________________________________ _______________________________________
__________________________________ _______________________________________
- --------------------------------------------------------------------------------
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
WITHHOLD
FOR ALL NOMINEES AUTHORITY
listed (except as to vote for
marked to all nominees
the contrary) listed Abstain
1. ELECTION OF DIRECTOR. On the proposal to elect the following [ ] [ ] [ ]
person to serve as a Class I Director for a three year period and
until his successor is elected and qualified:
J. Hoyle Rymer
-----------------------------------------------------------------
TO WITHHOLD AUTHORITY to vote for any individual nominee, strike a
line through the nominee's name in list above.
RECORD DATE SHARES:
FOR AGAINST ABSTAIN
2. RATIFICATION OF THE AMENDMENT TO THE COMPANY'S 1994 STOCK PLAN FOR [ ] [ ] [ ]
NON-EMPLOYEE DIRECTORS. On the proposal to amend the Company's
1994 Stock Plan for Non-Employee Directors (the "Directors' Plan")
to increase the number of shares of Common Stock authorized for
issuance under the Directors' Plan from 30,000 to 295,000, to
increase the amount of the annual award from $7,500 to $10,000
and to extend the term of the Directors' Plan from August 4, 1999 to
August 4, 2019 (20 years).
FOR AGAINST ABSTAIN
3. RATIFICATION OF THE AMENDMENT TO THE COMPANY'S 1994 LONG-TERM [ ] [ ] [ ]
INCENTIVE PLAN. On the proposal to amend the Company's 1994
Long-Term Incentive Plan (the "Incentive Plan") to increase the
number of shares of Common Stock authorized for issuance under the
Incentive Plan from 250,000 to 500,000.
FOR AGAINST ABSTAIN
4. RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. On the [ ] [ ] [ ]
proposal to ratify the selection of Price Waterhouse LLP as
independent certified public accountants for the year ending
December 31, 1998.
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF DORSEY TRAILERS, INC.'S
BOARD OF DIRECTORS AND MAY BE REVOKED BY THE
STOCKHOLDER PRIOR TO ITS EXERCISE.
Please be sure to sign and date this Proxy. Date_______________________
- -------------------------------------------------------------------------
Shareholder sign here Co-owner sign here
- --------------------------------------------------------------------------------
DETACH CARD
